Wednesday, August 13, 2014

Gun Collections Pose Special Estate Problems

Taxes are a heavy component ofestate planning, but it is important to be alert for other issues. Even though much of my practice is in a right-to-carry state (Florida), it hadn’t ever crossed my mind that guns require special attention in estate plans until I received a heads up from Allen J. Margulis of Total Counsel Law Group. I asked Attorney Margulis if he would like to do a guest post on the subject of gun trusts and he was gracious enough to provide the following:

People may collect guns for self‐defense, target shooting or hunting. Guns may be investments or heirlooms. Many gun owners want their guns to be used responsibly and be passed on to those who appreciate them. Certain firearms and accessories are federally restricted. A state may restrict them further. For example, short‐barreled rifles, automatic weapons, silencers and other such items, require a federal tax stamp to acquire as well as the approval of the local Chief Law Enforcement Officer (CLEO.) There are many regulations and issues surrounding passing guns down to one’s heirs that are not present with a bank account, chair, picture or other type of property. We must consider not only where the beneficiary lives, the laws of that state, the laws of the state where the items are located, the eligibility of the beneficiary to be in possession, but also:

(1) Is it a good idea to put a weapon in the hands of the beneficiary? Are they mature and responsible enough?

(2) If not, what will we do?

A Gun Trust is a special purpose revocable living trust. A Gun Trust is written to hold only firearms. The owner of the gun is the trustee and the beneficiary. The owner appoints successor trustees and lifetime and remainder beneficiaries. The trust can be amended or revoked at any time and the owner can name and remove beneficiaries. In the past, Gun Trusts were created primarily for NFA restricted firearms (Title II items ‐ silencers, short-barreled rifles, shotguns, and machine guns) but lately they have attracted the attention of those who own “assault weapons” .

Gun Trusts are used for two main reasons. The first is to expedite a transfer of a National Firearms Act firearm. Using a trust means you do not have to obtain the approval of your local Chief Law Enforcement Officer (CLEO) and the application can be sent directly to BATF. This saves a lot of time.Registration of a NFA firearm to an individual or corporation takes approximately one to three months to complete. The firearm cannot be handled or transported by any other private individual unless the firearm’s registered owner is present. However, NFA items owned by properly drafted trusts may be legally possessed by any Trustee and a beneficiary may use the item in the presence or under the authority of the Trustee. The second reason is to provide detailed instructions over disposition of one’s gun collection.

Many gun dealers make trust forms available. The problem is that they are usually just standard revocable living trusts, not specifically written about firearms ownership. They typically do not provide guidance or limitations for the Trustee who may find him or herself committing a felony in the way the items are used, held, transferred or sold. Some people cannot legally possess firearms. Some transfers are illegal. A properly written “Gun Trust” for NFA purposes is far more than a form. It helps the decedent’s loved ones deal with items that are problematic at best under both state law and federal law. Improper administration of regulated firearms can result in a criminal conviction and fines. Certain conduct constitutes a criminal offense, including receiving or possessing a firearm transferred to oneself in violation of the NFA; receiving or possessing a firearm made in violation of the NFA; receiving or possessing a firearm not registered to oneself in the National Firearms Registration and Transfer Record; transferring or making a firearm in violation of the NFA; or obliterating, removing, changing, or altering the serial number of the firearm. Penalties can include up to ten years in federal prison; forfeiture of all devices or firearms in violation, forfeiture of all rights to own or possess firearms in the future and a penalty of $10,000 for certain violations.

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One of my favorite movies is Grand Torino. The reading of the will at the end where the Grand Torino goes to his Hmong friend rather than his snotty granddaughter is satisfying, but if he had been my dad or grandad I would have been much more interested in the rifle (Calibre .30 M-1, an air-cooled, gas operated, clip fed, semi-automatic shoulder weapon) that he had used to intimidate the punks on his lawn. (George Patton called that rifle the “greatest single battle implement ever devised by man”). I would have also had my eye on the Model 1911 .45 caliber pistol that he pointed at the gang bangers who were harassing the kid’s sister. Somehow I suspect that if the son had mentioned a gun trust to the Clint Eastwood character it would have gone over even less well then the assisted living facility brochure. You may want to reflect on that before you pass this article along.

A common contribution is essential for the maintenance of the public forces and for the cost of administration. This should be equitably distributed among all the citizens in proportion to their means.

Declaration of the Rights of Man

Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.